Strengthening global indicators and steady commodity costs set the stage for another robust opening on the Toronto Stock Exchange
Headline: Market Recap: Mixed Results as Trade Tensions Persist, but Canadian Stocks and Major Indices Reach New Highs
The global financial market saw mixed results on Thursday, with some indices closing higher and others remaining unchanged. The Dow Jones Industrial Average futures were up 0.57%, while S&P 500 futures gained 0.67%. The Nasdaq futures showed a positive trend, increasing by 0.84%.
In the Asian markets, stocks closed higher due to Fed rate cut bets, hopes for a Sino-U.S. trade deal, and better-than-expected Chinese export data. West Texas Intermediate Crude oil futures were gaining 0.81% at $64.90 a barrel, while gold futures rose 0.31% to $3,444.20 an ounce. Silver futures also saw an increase of 2.03% to $38.670 an ounce.
The Canadian stock market set a new record on Wednesday, with the S&P/TSX Composite Index reaching a new record closing high of 27,920.87, up by 1.27%. Canadian shares are expected to open higher on Thursday morning, with TSX futures gaining about 0.7%. Major Canadian companies reported strong earnings for the second quarter of 2025. BCE Inc. reported adjusted net earnings of $592 million, while Restaurant Brands International Inc. reported diluted earnings per share of $0.58. Canadian Natural Resources reported adjusted net earnings of $2,459 million, and MDA Space Ltd. reported second quarter net income of C$27.2 million.
However, the Canada-U.S. trade relationship under the Canada-United States-Mexico Agreement (CUSMA/USMCA) remains strained due to escalating tariffs imposed by both sides. The U.S. has increased tariffs on certain Canadian goods not covered under CUSMA, raising them from 25% to 35% as of July 31, 2025. Canada retaliated earlier in March 2025 with a 25% tariff on $29.8 billion of U.S. products. Despite tariffs, about 85% of Canada-U.S. trade remains tariff-free under CUSMA due to compliance with rules of origin.
The escalating tariffs and trade tensions have introduced uncertainty and pressure on sectors heavily reliant on U.S. trade, such as steel, aluminum, and automotive industries. Although the bulk of Canadian exports remain duty-free due to CUSMA compliance, the retaliatory tariffs and potential tariff expansions create market volatility affecting investor confidence in trade-exposed Canadian companies. The Canadian government’s efforts to diversify exports and invest in industrial competitiveness aim to mitigate some negative trade impacts, but short- to medium-term uncertainty continues to influence Canadian equities, especially those concentrated in affected industries.
Meanwhile, the major European markets are up in positive territory, boosted by some upbeat earnings updates. Onex Corp reported net earnings of $229 million for the three months ended June 30, 2025, and the Ivey Purchasing Managers Index in Canada rose to 53.3 in June 2025, signaling economic expansion. U.S. President Donald Trump's new tariffs took effect against dozens of countries. The Composite PMI in Canada rose to 48.7 in July 2025, with both the manufacturing and services sectors posting softer downturns.
In summary, the Canada-U.S. trade agreement under CUSMA exists but is under significant strain due to tariff escalations and countermeasures, leading to uneven tariff application and ongoing uncertainty. This situation contributes to volatility and selective pressure on Canadian shares within trade-intensive sectors. The political tensions and tariff risks remain key factors for investors monitoring Canadian equities linked to cross-border trade.
- Despite the success of Canada's stock market and strong earnings from major Canadian companies, the escalating Canada-U.S. trade tensions, such as tariff escalations and countermeasures, are creating market volatility and selective pressure on trade-exposed Canadian companies, making these equities a concern for investors.
- The Canadian government is aiming to mitigate some negative impacts of the trade tensions by diversifying exports and investing in industrial competitiveness, but the short-term to medium-term uncertainty surrounding this issue continues to influence the performance of Canadian equities, particularly those concentrated in affected industries such as steel, aluminum, and automotive.
